Workers are losing confidence in the economy

The good kind of career transition is when a worker quits. Leaving a job means that she has confidence in the economy and her prospects.

The bad kind of transition is when a worker is fired or laid off.

Unfortunately, recent labor-market trends are heading in the wrong direction, with data signaling that workers’ confidence in the economy is flagging. According to a Tuesday report from the U.S. Labor Department, there were 2.38 million quits in January, down from a recent peak of 2.45 million in November. Meanwhile, the number of layoffs and discharges rose to 1.74 million in January from a recent bottom of 1.51 million in November.

Now, those numbers have improved since the recession, but the recent trends aren’t great, signaling a bit of a labor-market hiccup. Indeed, there were 1.37 quits per layoff and discharge at the start of 2014, the lowest ratio since September (as shown in the chart). That’s up from a low of less than 0.7 in April 2009, close to the end of the recession, but still below a series high of more than 1.8 in March 2006.

What’s going on?

“People know it’s really hard to get a job out there. People aren’t voluntarily quitting their jobs because they know it’s hard to be a job seeker,” said economist Heidi Shierholz of the Economic Policy Institute.

It’s no wonder that workers are concerned about their prospects: There were 4.54 million hires in January, below 5.04 million when the recession started at the end of 2007, signaling that the labor market still hasn’t made up all of the ground that it lost during the downturn.